Centene reacts to ‘unprecedented times’ with abbreviated investor day

Centene Corp. CEO Sarah London acknowledged “unprecedented times” Thursday morning as the health care giant held an abbreviated virtual investor day eight days after UnitedHealthcare CEO Brian Thompson was gunned down in New York City.

Thompson was on his way to a UnitedHealth investor day in Manhattan on Dec. 4 when 26-year-old masters honor student Luigi Mangione shot him several times. Police arrested Mangione Tuesday, and charged him with murder and various firearms offenses.

The shooting revealed an underlying societal anger toward health insurance companies over increased costs and dwindling coverage. In response, many health insurers are removing photos and personal information about their executives. Centene switched to a virtual investor day earlier this week.

“It would be an understatement to say we are operating in unprecedented times,” London said. “2024 has been a long, complicated and now tragic year for the industry.”

London then led a moment of silence for Thompson, who she called “a good man and father, a great leader, a thoughtful competitor and a friend.”

Centene abbreviated the investor day schedule due to the virtual format, but executives promised a full traditional event in the “next time we are all together in person,” said Jennifer Gilligan, senior vice president of finance and investor relations.

Two big opportunities

London briefed investors on “two exciting growth opportunities that sit right on top of our core platform of Medicaid, Medicare and marketplace.” They are:

1. Dual-eligible members in Medicare and Medicaid. With more than 750,000 unaligned dual members, “we see significant opportunity to advance care management, improve member engagement and experience and generate cost savings for duals alignment,” London explained.

“This is why we have been refining our Medicare footprint to overlap more closely with our Medicaid presence.”

Centene is more focused on low-income “complex populations” than when it laid out its 2022 strategic plan, London said. In April, the Centers for Medicare & Medicaid Services published a rule making it mandatory in 2030 that the carrier provide Medicaid benefits for an individual who also Medicare services.

“What provides Centene with an advantage in this market, footprint, focused and far-reaching relationships across our markets,” London said. “With the largest Medicaid footprint in the nation, we have proven infrastructure ready to serve more members than any other player.”

2. Individual coverage health reimbursement arrangements. ICHRA plans allow employers to offer a tax-free stipend to employees in lieu of health insurance. With a stipend, employees can shop on the individual marketplace and choose the insurance plan that works best for them.

“We see meaningful opportunity for ICHRA and further dislocation of group insurance for a number of reasons, starting with the fact that many employees today don't want the same options their parents had,” London said. “As baby boomers move more fully into Medicare coverage, the commercial market is increasingly made up of consumers who expect transparency, customization, choice and convenience in everything they do.”

During the recent open enrollment period, Centene launched ICHRA plans in six states.

Earlier this month, Centene announced a strategic partnership with Thatch, an online ICHRA platform, Allstate Health and QuickBooks. The collaboration introduces more than half a million QuickBooks employer groups to ICHRA and the Ambetter Health pretax health exchange health plans, London noted.

2025 financial goals

In an accompanying news release, Centene announced its 2025 financial goals:

• Total revenues of $166.5 billion to $169.5 billion.
• Premium and service revenues of $154.0 billion to $156.0 billion.
• GAAP diluted earnings per share of greater than $6.19.
• Adjusted diluted EPS of greater than $7.25.
• Health benefits ratio of 88.4% to 89.0%.
• Selling, general and administrative expense ratio of 8.1% to 8.7%.
• Adjusted SG&A expense ratio of 8.1% to 8.7%.
• Effective tax rate of 21.5% to 22.5%.
• Adjusted effective tax rate of 22.0% to 23.0%.
• Diluted shares outstanding of 491.0 million to 494.0 million.

"Centene is a mission-driven organization, dedicated to delivering high-quality outcomes for more than 28 million members, many of whom are among the nation's most medically complex and historically underserved populations," London said in the release. "Over the last three years we improved our core operations and invested in the experience of our customers and providers, all while delivering on our financial commitments."

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.